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RAWALPINDI, Pakistan - A grim-faced Pervez Musharraf bid farewell to his fellow generals Tuesday, a day before quitting as army chief in a move that could ease Pakistan's political crisis.

Opponents welcomed Musharraf's belated conversion to civilian rule and appeared to pull back from a threat to boycott January's parliamentary elections.

Nawaz Sharif, the prime minister Musharraf ousted in a 1999 coup, said Musharraf's conversion to a civilian president would make "a lot of difference," and he would only refuse to participate in the vote if all opposition parties agreed to do so as well.

But Sharif also kept up his rhetoric against the general, insisting that Musharraf lift a state of emergency imposed to prolong his rule.

Musharraf faces increasingly adamant calls from critics at home and abroad to lift the emergency imposed on Nov. 3 and make good on a long-standing pledge to restore civilian rule.

To calm the turmoil, he has released thousands of opponents and let all but one of Pakistan's independent news channels go back on the air.

On Tuesday, he took the first visible steps toward hanging up the uniform on which his eight-year domination of this nuclear-armed country of 160 million people has depended.

A guard of honor of about 150 army, navy and air force troops stood to attention as Musharraf arrived at the colonial-style army headquarters in the garrison city of Rawalpindi.

A military band played the national anthem as an unsmiling Musharraf, wearing gold-rimmed spectacles, a green-and-white sash over his uniform and more than a dozen medals on his chest, inspected the troops on a small parade ground.

He held a brief closed-door meeting with other top army commanders, then traveled to the headquarters of the navy and air force in the nearby capital, Islamabad, for more farewell salutes and handshakes.

Musharraf made no comment to reporters, who were allowed to watch and film some of the events.

Musharraf insists his continued rule as president is essential for Pakistan, which faces an increasingly violent onslaught from Islamic extremists, to remain stable as it reverts to democracy.

To secure his position, Musharraf has abrogated the constitution and purged the Supreme Court, which was about to rule on the legality of his victory in a presidential election held in October.

Pliant judges in the retooled court last week dismissed opposition complaints that Musharraf's retention of his military role disqualified him from running for elected office.

That maneuver and the crackdown on dissent has dealt a blow to his relations with Benazir Bhutto, another former prime minister who has returned from self-exile and who shares his secularist, pro-Western views.

Bhutto, who has twice been put under house arrest to stop her from leading protests, has joined Sharif in denouncing Musharraf's backsliding on democracy. However, she and Sharif are fierce political rivals, and there are doubts that they can forge a united front to force out Musharraf.

Bhutto says she is reluctant to leave the field open to pro-government parties and her spokesman said Tuesday she would applaud if Musharraf makes good on an oft-delayed pledge to leave the army.

"Let us see what happens tomorrow because he has reneged on his promise in the past," Farhatullah Babar said.

Musharraf is to appear in uniform for the last time Wednesday as he hands over his command to Gen. Ashfaq Kayani, a former chief of the intelligence service.

Kayani, a close associate of Musharraf, is widely expected to maintain the army's pro-Western policies even as he tries to repair the image of a force damaged by its direct involvement in politics.

An official insisted Tuesday that Musharraf's switch would bring no change in resolve against terrorism.

"Uniform or no uniform, it would not impact our war on terror," Interior Ministry spokesman Javed Iqbal Cheema said.

Sharif, who returned Sunday from exile in Saudi Arabia, went on CNN in September to calm doubts about his commitment to battling the Taliban and al-Qaida.

"You can't fight terror the way Mr. Musharraf is fighting," Sharif said, adding that the Pakistani leader "needs the threat of terror for his own survival. We will fight out of conviction."

But Sharif, a conservative with good relations with religious parties, is reaching out to the many Pakistanis who disagree with sending the army to fight militants along the Afghan border and who deride Musharraf as an American stooge. Civilians as well as militant have died in those operations and occasional U.S. missile strikes on targets inside Pakistan.

"If the outside world declares somebody a terrorist, we shall not act on it blindly," he told reporters in his home city of Lahore. "We are against extremism and terrorism. But it doesn't mean to allow foreign countries to bomb our people."

That posture could entice some votes away from Bhutto, who has said she might let U.S. troops strike at Osama bin Laden if the al-Qaida leader is found in Pakistan.

It remains unclear whether Sharif can assemble a slate of candidates strong enough to challenge the pro-Musharraf ruling party or Bhutto's party in January.

Still, a day after filing his nomination papers, Sharif gave the strongest hint yet that he would actually take part.

"If all political parties agree, I think we should boycott the polls because it is a lethal weapon," he said. "But if we don't get an agreement, we should try to reach our objectives in the polls."